Mauritius: Development of Second Tier Regulated Securities Market

Mauritius: Development of Second Tier Regulated Securities Market

This project was proposed directly to FIRST by the Stock Exchange of Mauritius (SEM) with the support of the Ministry of Financial Services in September 2004. The purpose of the project was to restructure the existing OTC Market and to consider the establishment of a second tier listing facility.  The project called for conducting a feasibility study on the establishment of an alternative second tier market, an analysis of other OTC or second tier markets around the world, the preparation of rules governing the establishment of a new second tier market and a project plan for the closure of the OTC market and launch of a new second tier market.

The main outputs of this project were as follows:

  • Comparative study of OTC and second tier markets
  • Feasibility study report - establishing second tier market and restructuring OTC market
  • Presentation to the FSC
  • Presentation to the SEM Board
  • Presentation to the FSC
  • Report on OTC market rules
  • Report on new market rules
  • Rules of the development and enterprise market (DEM)
  • Guidance notes for the development and enterprise market
  • Internal procedures manual for the development and enterprise market

The DEM was launched by the SEM in August 2006 with 43 companies that had a market capitalization of Rs31 billion.  As of November 2009, market capitalization was Rs47 billion against a market capitalization in the official market of Rs156 billion.  SEM is also seeing active trading of the securities listed on the DEM. On November 17th 2009, there were 133,000 trades with a value of Rps1.7 million  as compared to the official market’s 681,000 trades to a value of Rps13 million. Three companies were transferred from the OTC market to DEM during January 2007 and the OTC market formally closed on 30th January 2007.

Lessons Learned

Provided below are some of the key lessons learned from this project.

  • Working with an effective counterpart – in this case the Stock Exchange of Mauritius- with a clear idea of its objectives was a key to the success of this project.
  • The capital markets in Mauritius already had a substantial infrastructure in place with both active and well populated primary and secondary markets in official market securities and a fairly active over the counter market.
  • Reports and outputs produced from this project have sparked interest in other countries (i.e., Zambia and Tanzania) to establish second tier markets.


  • The feasibility study. This was a key foundation for the eventual launching of the Development Enterprise Market. The report responds to whether the pre-conditions for a successful market development were there or not and what steps were needed to pave the way for successful implementation.
  • The rules for admission to the market and subsequent listing rules
  • Terms of reference